The U.S. Federal Trade Commission (FTC), has settled charges it filed last year against four promoters of crypto-denominated multi-level marketing schemes.
Following a federal trial in a Florida court, the operators of the fraudulent investment schemes are ordered to pay restitution and have been barred from operating or participating in other such MLM schemes, according to a statement made by the FTC on August 22.
Under the corporate names Bitcoin Funding Team and My7Network, the fraudsters promoted their crypto investment schemes by misrepresenting potential earnings. They used social media, YouTube and conference calls to promote the scams.
In one instance, investors were promised $80,000 in monthly income from an initial investment of $100.
Thomas Dulca, Eric Pinkston, Louis Gatto and Scott Chandler sat at the top of a pyramid scheme. In order to stay in operation, investors were encouraged to recruit new participants. Though promised large rewards, most participants “failed to recoup their initial investment.”
In addition to his promotion of Bitcoin Funding Team, Chandler advertised for Jetcoin, “which promised participants a fixed rate of return, but failed to deliver on these claims,” the FTC alleged.
Dulca and Pinkston are required to pay $453,932 and $461,035, respectively, though Pinkston’s, who is unable to pay the full amount, will be suspended upon payment of $29,491. Chandler is ordered to pay $31,000.
It is unconfirmed whether Gatto will pay a settlement for his involvement in the chain referral schemes.
In 2018, the FTC successfully petitioned the court to freeze the fraudster’s assets. The U.S. regulator also asked the court to order the defendants to stop working together or creating new business entities.
As part of the settlement, the men are barred from ever “operating, participating in, or assisting others in promoting or operating any multi-level marketing program, pyramid, Ponzi, or chain referral scheme.” They are also barred from misrepresenting investment opportunities.
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